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Page | 160 IRS Mileage rates are allowed for self-employment expenses. (If mileage is used, do not use other vehicle expenses such as gas, insurance, etc.) The 2024 updated IRS Mileage rate is 72.5 cents per mile (effective Jan 1, 2026).

Payments and the interest on the principal of real estate mortgages on income-producing property may be deducted as costs of doing business, as well as taxes on the property. Make sure that the amount deducted is for the business share only, and that the interest is not deducted twice. Money paid to purchase capital assets, equipment, machinery, real estate, and other durable goods is a deduction, including the interest as long as the assets are needed for the self-employment business.

When the self-employment property is connected to the home property, no portion of the costs of the home (such as rent, mortgage, taxes, insurance, and utilities) is deductible as a business cost. If the home is connected to the business property and costs cannot be divided, they are not allowed as a business or shelter expense. If the costs can be separated, a portion should be used for home personal expense and a portion for the self-employment expenses. Exception: If utilities are for both the home and the business, no deduction is allowed for the business unless the business utilities are on a separate utility meter.

If the self-employment enterprise meets the office in the home requirements, and the simplified calculation is used, all the verified home expenses will be budgeted in the SNAP shelter deduction. If actual expenses are being calculated by the self-employment Specialist, and the household completed IRS form 8829, Office in the Home, the self-employment Specialist will advise what amount to use as the shelter deduction.

In determining the amount to be deducted from gross income as the cost of producing income, the following may not be deducted.

A. Do not deduct any amount claimed as the net loss sustained in any prior period. B. Do not deduct federal, state, and local income taxes, money set aside for retirement purposes, and other work-related personal expenses (such as the cost of self-employed individuals traveling to and from their place of business) because these expenses are accounted for by the 20 percent earned income deduction. C. Do not deduct depreciation.

8701.10 Offsetting Losses of Self-Employed Farmers/Ranchers A farmer/rancher must receive (or anticipate receiving) annual gross proceeds of $1,000 or more from the farming/ranching enterprise before losses can be offset. A. Eligibility Tests: The dollar amount of a farm/ranch loss must be first subtracted from all other countable household self-employment income and then subtracted from all other income prior to applying the gross income test.

B. Budgeting Income: 1. Calculate income by adding together all self-employment income (BUSI). Offset the farm/ranch loss. If the loss is absorbed allow the 20% earned income deduction on the balance of remaining self-employment income. If the loss is not absorbed, go to step 2. 2. Total all other income (JINC, UNEA). Offset the farm/ranch loss. The 20% earned income deduction is allowed on the total wages (JINC) prior to the farm/ranch loss offset. 8701.11 Self-Employment From Boarders Households owning and operating a commercial boarding house must have their income calculated the same as any other household with self-employment income as discussed previously. Payments